Previous work (see last year's annual report) involved study of the mechanism of activation of the Mg(II)-ATP-dependent phosphoprotein phosphatase (termed Fc-M) isolated from rabbit skeletal muscle. This phosphatase appears to be major phosphatase in rabbit skeletal muscle and plays an important role in regulating glycogen synthesis and degradation. Fc.M is inactive as isolated, and is activated by kinase FA and Mg(II)-ATP. There have been conflicting reports on whether the catalytic subunit of cAMP-dependent protein kinase is able to substitute for kinase FA in the phosphatase activation reaction. We find that cAMP-dependent protein kinase (in the presence of cAMP and MG(II)-ATP) is unable to activate the phosphatase. However, inclusion of cyclic A kinase in the activation reaction with kinase FA results in a cyclic AMP-dependent inhibition of the phosphatase. We have shown that the phosphatase inhibition is due to the dissociated regulatory subunit of the type II cAMP-dependent protein kinase (R2II). The isolated protein kinase catalytic subunit (C) does not affect the kinase FA and Mg(II)-ATP activated phosphatase. Inhibition of the phosphatase by isolated R2II can be reversed by the addition of an excess of C to reform the protein kinase holoenzyme R2C2. The addition of cAMP to dissociate the holoenzyme restores the phosphatase inhibition. Heating R2II for 5 minutes at 90 C destroys both its ability to inhibit the kinase activity of isolated C and its inhibitory effect on phosphatse Fc.M. Further work was directed at charcterizing the inhibition of phosphatase by R2II. R2II inhibition of phosphotase Fc.M appears to result from both a direct effect on the activated phosphatase and an inhibitory effect on phosphatase activation.